Weyerhaeuser's Q4 2024: Unpacking Contradictions in Lumber Demand, Operating Rates, and Tariff Implications

These are the key contradictions discussed in Weyerhaeuser's latest 2024Q4 earnings call, specifically including: Lumber Market Dynamics and Demand Outlook, Operating Rates in Engineered Wood Products, Demand Outlook for Housing and R&R, and Tariff Implications:



Challenging Market Conditions and Profitability:
- Weyerhaeuser reported full year GAAP earnings of $396 million, or $0.54 per diluted share, with adjusted EBITDA of $1.3 billion.
- The company faced a challenging market backdrop, particularly in lumber, but maintained profitability through solid execution and strategic initiatives.

Investment in EWP and Growth:
- Weyerhaeuser plans to invest approximately $500 million to build a state-of-the-art TimberStrand facility in Arkansas.
- This investment aims to capitalize on the growing market for engineered wood products and will add 10 million cubic feet of production, doubling Weyerhaeuser's TimberStrand offering.

Increased Demand in Timberlands:
- In the West, pricing for grade logs increased significantly in December, driven by healthy domestic demand and reduced log supply.
- This led to comparable domestic sales realizations and increased sales volumes compared to the third quarter, despite a mix effect.

Natural Climate Solutions Expansion:
- The company's Natural Climate Solutions business achieved $84 million in adjusted EBITDA in 2024, a 79% increase year-over-year.
- The growth was driven by strong contributions from conservation, mitigation banking, and renewables projects, with significant premium pricing for Forest Carbon credits.

Strategic Harvest Plans and Market Outlook:
- Weyerhaeuser expects total company fee harvest volumes of approximately 35.5 million tons in 2025, slightly higher than 2024.
- The company anticipates higher sales volumes and realizations in the West due to increased domestic log demand and improved sales in Japan, partially offset by reduced sales to China.